A family that I met with seemed to be very concerned about their retirement future. As we discussed their financial situation, I discovered that they had done a wonderful job of preparing for retirement, saving more than $1 million. The husband just retired as a firefighter; and after teaching elementary school for over 40 years, his wife will retire at the end of this school year. They will each have a pension, and their home is debt-free. What’s more, they have three grown children who are successful college graduates.
After listening to them describe how they had planned so well to reach this point in their lives, I ask them, “With all of the planning and preparation you have done so far, why do you have that look of panic in your eyes?” I’ll never forget their response to my question:
“Greg, when we started on this journey over 40 years ago, we had a game plan. We knew we were going to save a percentage of every paycheck, we would never buy everyday items on credit, and we were going to pay off our home as quickly as possible. We knew where we were headed, and we stuck to our plan. We invested during the ‘80s and ‘90s when everything seemed to be going up.
“Today things are different, and we don’t feel like we have a game plan for the rest of our lives. We understand how to save and eliminate debt, but retirement can be so much more complex. How do we protect ourselves from the next market crash or from running out of our savings?”
This couple realized a valuable truth: The game plan that gets you to retirement is not the same one that gets you through retirement. They understood that just having a savings and a pension was not enough to ensure a successful retirement.
The game plan for the rest of your life must have some crucial elements.
- Your retirement game plan must allow you to be successful in any economy, providing protection even when the markets are in the midst of a correction. You can no longer afford to see your retirement accounts lose 20%, 30%, or 40% like they did in 2008. You can’t buy into the idea anymore that it is just a paper loss, because not only have you lost money, you have also lost the time it will take to recapture that loss in retirement – and time is one of your most valuable commodities. The good news is that today there are strategies that can help you achieve growth to keep pace with inflation and prevent you from losing ground during the next correction.
- Another hazard is potential for a long-term illness that can devastate your plans and blitz your savings. I meet many families who have looked into long-term care insurance but found it to be very expensive. So, what is your game plan to pay these expenses if they come your way? There are many strategies that can help people like you who want protection but don’t want to spend money on premiums if the devastation doesn’t happen, or who find the insurance premiums to be out of their budgets.
- Probably the most significant part of your retirement game plan is your income, because income equals lifestyle. The biggest fear among the people we serve is that they will run out of money before they run out of time. Income is the foundation of everything we do as advisors for our clients. You made promises to yourself to enjoy retirement, but you don’t always do what you’d like because you do not know if you can. You need a solid plan that allows you to spend what you need to enjoy your retirement. With the right plan, you can have an income you’ll never outlive.
- Your game plan should also possess solutions that help reduce or eliminate taxes while providing strategies for the efficient transfer of your legacy to the people you love.
So, you can see why that family had so much anxiety about retirement. They realized that there was more to having a retirement plan than just saving money. They realized that if they got it wrong, it would be too late for a do-over. When planning for retirement, it’s important to find a financial advisor who can help create a plan that will give you a financial peace of mind and a stable income for the rest of your life.
Investment advisory services offered through Claraphi Advisory Network, LLC., an SEC-Registered Investment Adviser. Insurance and annuities offered through Legacy Wealth Partners. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.